Further Reading

Like the new venture, Civica was born out of frustration with the pharmaceutical industry’s steep price increases as well as perilous shortages of essential drugs. In 2018, numerous health care organizations banded together with three philanthropies to manufacture their own brand of generic drugs, forming Civica and thwarting the generic industry. Their aim was to provide hospitals with injectable generic medications in steady supplies at affordable prices.

The health care organizations involved in Civica now represent over 1,200 hospitals in 46 states. Last October, Civica delivered its first drugs to a hospital in Utah and is now producing and distributing several drugs.

With the new partnership with BCBS companies, Civica will expand out of just hospital medications. Specifically, the deal will create a subsidiary that will either make drugs or partner with manufacturers to offer more affordably priced generic versions of select drugs in exchange for aggregate, multi-year purchasing commitments.

The partners were mum on which drugs they will select but said that they will first focus on ones “identified as having high potential for savings” that currently have little competition. They also encouraged others, including “other health plans, employers, retail partners, and health care innovators” to join their effort.

Further Reading

In an interview with The New York Times, Civica board chairman Dan Liljenquist said that the new venture “will not solve all the problems of the world, but we do know that 90 percent of prescriptions are generic, and there are certain parts of the generic markets that are not functioning like competitive markets should. And we intend to compete in those markets.”

The pharmaceutical industry has forfeited any right to their patent portfolios - especially those based on publicly funded research at universities.Put all patents older than 5 years in the public domain, and bring on the generics.

This has nothing to do with patents anymore. Generic drugs are generic because the patents have expired. The problem is that the cost of entry into the drug manufacturing market is ENORMOUS, and there are built-in regulatory barriers to entry that can be raised by unscrupulous pharmaceutical manufacturers.

For example, all generic drugs must be tested and approved as "equivalent to the approved agent" by the FDA before they can be given to people. This testing, of course, is paid for by the new generic manufacturer and is costly all on its own. What some pharma companies have taken to doing, however, is making the originally FDA approved agent INCREDIBLY DIFFICULT for the new generic manufacturer to obtain. Can't get the original agent, can't compare your new generic to that original agent, can't get it approved by the FDA. Martin Shkreli's company did this in order to make it impossible for generic manufacture of pyrimethamine (Daraprim).

In fact, most of the drugs we're talking about here have been off-patent for DECADES. What's happened is that pharmaceutical companies, usually at the behest of venture (vulture) capitalists, realize that they've got mini-monopolies on these agents and why not raise the price? Who cares about mass suffering death and disease, there's PROFIT to be made!

Yeah, it is a little frustrating to read the comments and see everything getting lumped together. Most of the generic drug industry is actually one of the most functioning parts of the entire healthcare system in the U.S. For high volume drugs taken by lots of people the generic market is super competitive, and prices drop incredibly quickly as new companies enter the market for the drug.

The issue we have here is mostly with older drugs for smaller patient populations. Some of the problems are regulatory, as you mention. One of the issues had been that there were older generic drugs that have been on the market for pretty much ever, but never had any modern clinical trials done that would be needed for approval today. In order to encourage companies to do these trials, and get more accurate information about safety and efficacy, the FDA said they would give a period of market exclusivity to companies that did the work. This was always expected to raise prices somewhat, but people didn't foresee the Shkrelis of the world raising prices by thousands of percent (they should have, it was pretty predictable, but they didn't).

Other issues are more natural, where if you have a generic drug that is needed for only a few people, it generally doesn't make sense for there to be a ton of competitors producing it. So, maybe you've got two people making the drug, and then one of them has a problem with their factory, or the FDA shuts them down because they fail an inspection, or they go out of business, or whatever....and all of a sudden the other company realizes it has a monopoly and adjusts prices accordingly. Or, the original owners are more ethical, and don't do that, but a PE group notices and makes the owners an offer they can't refuse, and they raise the price. They can do that because, as Happy mentions, it is expensive to get some of these drugs approved and on to the market. The regulatory costs are fairly modest compared to a new drug, but still a lot, and setting up manufacturing can be costly too. Doesn't make sense to do that if the other guy can just quickly lower prices back down again if you enter the market.

Which is why something like the insurers getting into the game, and not naming which products they are going to manufacturer makes sense. It is more of a game theory credible threat to any would be generic monopolists, that hey, if you raise prices too high, we'll jump in...and we can afford to stay in the business longer than you can, and don't have to make money on the drugs, it will be enough if we can just stop other companies from raising prices. So, they'll be more than happy to put a small generic player out of business. At least that's my read of it, without having looked much into the details recently.

"game theory credible threat". I like it, that would be Mutually Assured Drugs.

Unpopular opinion: health insurance companies get **more** than their fair share of blame. Why? Because they're at the consumer-facing end of a messed up system.

Don't get me wrong, US health insurance companies are super corrupt and very worthy of scorn. But frankly there are worse actors out there: hospitals that form regional monopolies, pharmaceutical companies that suppress research and lobby for anti-competitive regulation, and on and on. The problem is systemic.

I'm fine with either Medicare 4 All, like they have in the UK, or a centrist alternative like a public option with strong regulation, like they have in Germany or France. But I think the reason why M4A seems like the ONLY progressive option is because people mistakenly place the entire blame on only the insurance part instead of the whole screwed up system.

People who advocate Medicare 4 All have clearly never actually had to deal with Medicare and all its part A's, B's, C's and/or D's. Especially the latter.

I advocate Medicare 4 All, I'm on Medicare Part A, B, C and D and it's the best coverage I've ever had.

That doesn't say much about your previous coverage.

(Also, if you really are on all four parts, you're probably (not necessarily) paying for something you don't need. And Part C is by private companies, not the feds, although the companies have to be Federally approved.)

No, my previous plans were crap. They were also what private employers were giving me for coverage because they're cheap sons of bitches and don't want to pay for it.

So we agree that your previous plans are a poor baseline against which to judge Medicare.

Quote:

So your argument is invalid thinking they can do it better.

That doesn't follow. Firstly, that was never my argument, secondly, your personal experience with crappy employers and their coverage is hardly exemplary of everyone's employer coverage or private plans. But sure, it's all about you.

No, it'll about you. "I got mine, fuck you." is what you're saying.

I don't want to be a slave to an employer in order to have medical coverage. I take medication where the generic is $700 a month without insurance. This means, when my medical care is bound to an employer, it makes changing jobs that much harder. My new employer better have good medical coverage or I'm fucked. It makes working for myself becomes significantly harder because I have to pay through the nose simply to cover my own medical expenses.

The entire rest of the goddamn world has figured this out. Except the US where assholes like you sucking on Ayn Rand's shriveled, Social Security collecting teat have this childish fantasy that private industry somehow does things like medical care better when the entire rest of the goddamn world has strict regulation on medical costs and the government in some way subsidized individual care because when it's left to private industry they'll rape you coming and going.

America isn't that special when it comes to this, unless you mean of the "education" type. We've had 38 years of Republicans circle jerking to the corpse of Saint Ronnie acting like the government does everything wrong, with no proof beyond their own policies that make it happen in the first place.

If you want to live in a small government nirvana then move to Somalia and see how it works out for you.

SOP for pharmacuital companies at this point is to use a mix of advertising to convince people to not use the generic and "coupons" to make their drugs $0 or even negative-cost to consumers until the competition goes under due to lack of sales.

Indeed: if I'm charging $500/vial for insulin, and you are insured, and your co-pay is $50; I can send you a $100 rebate and come out $400 ahead.

Why would you buy the generic, even if it's free, when mine is -$50 and heavily advertised?

Elect an administration that acts on those anti-competitive practices, and a Congress that won't stonewall the enforcement.

Elect an administration that nationalizes health care and the problem goes away forever (because another administration can change those laws if people are retarded enough to do again what they did in electing this administration).

In fairness, this issue isn't solely on our current administration. It's on the willingness of the parties to go along with pharmaceutical lobby money. Hence why we need to nationalize the whole fucking thing.

You don't lobby for advantages when you don't have a private business to lobby for.

No, instead you get government bureaucrats making the same sort of cost-benefit analyses that Big Pharma does and discontinuing production of expensive exotic drug X because really, it's only needed by a few hundred people so not really worth it, the taxpayers will get more benefit elsewhere. Only this time, if you're one of those people who needs drug X, you have nowhere else to go to get it at any price.

See also, SLS.

That's your assumption, not borne out in reality. In Australia as an adjunct to our Pharmaceutical Benefits Scheme, we have the Life Saving Drugs Program, which includes a definition of rare diseases being 1:50,000 people or less in the Australian population -- that works out to around 500 people.

The cost-benefit analysis for a government with universal health care is not the same as the cost-benefit analysis for a pharma.

So call me dumb, but there are already a number of generic drug manufacturers in the marketplace -- Teva, Mylan, Sandoz, Amneal Endo International, Sun Pharma, Aurobindo Pharma, Dr. Reddy's Laboratories and Apotex. What is the addition of another manufacturer going to add? Is one more manufacture really going to seriously undercut the other companies by significant amount? I'm highly skeptical.

So call me dumb, but there are already a number of generic drug manufacturers in the marketplace -- Teva, Mylan, Sandoz, Amneal Endo International, Sun Pharma, Aurobindo Pharma, Dr. Reddy's Laboratories and Apotex. What is the addition of another manufacturer going to add? Is one more manufacture really going to seriously undercut the other companies by significant amount? I'm highly skeptical.

It is a nonprofit, all the above are for-profit companies AFAIK (Sandoz has been merged into Novartis).

SOP for pharmacuital companies at this point is to use a mix of advertising to convince people to not use the generic and "coupons" to make their drugs $0 or even negative-cost to consumers until the competition goes under due to lack of sales.

Indeed: if I'm charging $500/vial for insulin, and you are insured, and your co-pay is $50; I can send you a $100 rebate and come out $400 ahead.

Why would you buy the generic, even if it's free, when mine is -$50 and heavily advertised?

If I had that choice with Insulin, I would absolutely do that. Those "coupons" the drug dealers give out? Those only work if you have insurance. If you are uninsured for any reason, you are screwed. Basically you die.

SOP for pharmacuital companies at this point is to use a mix of advertising to convince people to not use the generic and "coupons" to make their drugs $0 or even negative-cost to consumers until the competition goes under due to lack of sales.

Indeed: if I'm charging $500/vial for insulin, and you are insured, and your co-pay is $50; I can send you a $100 rebate and come out $400 ahead.

Why would you buy the generic, even if it's free, when mine is -$50 and heavily advertised?

Elect an administration that acts on those anti-competitive practices, and a Congress that won't stonewall the enforcement.

Elect an administration that nationalizes health care and the problem goes away forever (because another administration can change those laws if people are retarded enough to do again what they did in electing this administration).

In fairness, this issue isn't solely on our current administration. It's on the willingness of the parties to go along with pharmaceutical lobby money. Hence why we need to nationalize the whole fucking thing.

You don't lobby for advantages when you don't have a private business to lobby for.

Nationalizing health care doesn't exclude private enterprise from developing new medicines and treatments. Quite the opposite in the proposals that have been floated so far. There is ample room for entrepreneurialism under a single payer program.

If you believe the Big Pharma line NO country with single payer has invented a single medication ever. So no new drugs ever from

In a move that surprises no one, the companies that foot the bill for most of those $1500+ pills are looking to invest in companies that make generic equivalents that cost $15.

That is actually one thing I don't quite understand. Aren't the insurance company's premiums, and thus, profits linked, by law, to their medical expenses? It was one of the flaws, or misplaced incentives, in the ACA. I think it was that the the premium is capped so that 80% of it must go towards medical expenses.

So the insurance company would make $3.50 off the $15 generic pill, but $350 off your sample $1500 pill.

SOP for pharmacuital companies at this point is to use a mix of advertising to convince people to not use the generic and "coupons" to make their drugs $0 or even negative-cost to consumers until the competition goes under due to lack of sales.

Indeed: if I'm charging $500/vial for insulin, and you are insured, and your co-pay is $50; I can send you a $100 rebate and come out $400 ahead.

Why would you buy the generic, even if it's free, when mine is -$50 and heavily advertised?

Elect an administration that acts on those anti-competitive practices, and a Congress that won't stonewall the enforcement.

Elect an administration that nationalizes health care and the problem goes away forever (because another administration can change those laws if people are retarded enough to do again what they did in electing this administration).

In fairness, this issue isn't solely on our current administration. It's on the willingness of the parties to go along with pharmaceutical lobby money. Hence why we need to nationalize the whole fucking thing.

You don't lobby for advantages when you don't have a private business to lobby for.

Nationalizing health care doesn't exclude private enterprise from developing new medicines and treatments. Quite the opposite in the proposals that have been floated so far. There is ample room for entrepreneurialism under a single payer program.

If you believe the Big Pharma line NO country with single payer has invented a single medication ever. So no new drugs ever from

Germany is not single payer. Their system is actually quite similar to the ACA, except that the premiums are set as a percentage of income for most people, and that the insurance companies all share formularies and a network of doctors. There may also be other differences, but those are the ones I remember off the top of my head.

Unpopular opinion: health insurance companies get **more** than their fair share of blame. Why? Because they're at the consumer-facing end of a messed up system.

Don't get me wrong, US health insurance companies are super corrupt and very worthy of scorn. But frankly there are worse actors out there: hospitals that form regional monopolies, pharmaceutical companies that suppress research and lobby for anti-competitive regulation, and on and on. The problem is systemic.

I'm fine with either Medicare 4 All, like they have in the UK, or a centrist alternative like a public option with strong regulation, like they have in Germany or France. But I think the reason why M4A seems like the ONLY progressive option is because people mistakenly place the entire blame on only the insurance part instead of the whole screwed up system.

People who advocate Medicare 4 All have clearly never actually had to deal with Medicare and all its part A's, B's, C's and/or D's. Especially the latter.

I advocate Medicare 4 All, I'm on Medicare Part A, B, C and D and it's the best coverage I've ever had.

That doesn't say much about your previous coverage.

(Also, if you really are on all four parts, you're probably (not necessarily) paying for something you don't need. And Part C is by private companies, not the feds, although the companies have to be Federally approved.)

No, my previous plans were crap. They were also what private employers were giving me for coverage because they're cheap sons of bitches and don't want to pay for it. So your argument is invalid thinking they can do it better.

And Part C is administered by private companies, who have the Federal Government telling them exactly what to do and how to do it, so we're back to discussing how the government provides healthcare.

The simple fact is there's about 6 billion people in the world whose health care comes more or less directly from their government and they're not begging to go back to a system like the US has. (The rest live in literal anarchy, utterly broke nations and the United States.) It's almost like it works better...

I have never had 'crap' insurance. I have had high deductibles, yes, but typically my employers have provided and contributed to an HSA on my behalf. My current health plan gives me free access to mental health services, something that Canadians have to pay for. It also has a deductible of $300.

Edit: let me add that, despite having 6 surgeries and nearly dying within the past 3 years (septic shock), I have paid only around $1,500 in Heath care costs excluding insurance premiums ranging between $120 and $230 a month (employer change).

I am all for less expensive medication but I am not a fan of generics because the quality is not the same. I'll give an example : I used to take Lipitor prior to the expiration of its patent. After the patent expired I began taking the generic substitute. With no other changes to medication or diet my glucose levels shot through the roof and I was prescribed an anti-diabetes medicine I can't remember the name of now. That led to a another change in medication that does not affect my glucose levels. I asked my doctor what was up with that and he said that is common with generic medications because they are usually made in India or China where the quality control is somewhere between lax and non-existent.

I am not convinced generic medication is really the answer but something certainly has to be done.

Here in the UK, generics are extremely common and made in places like India and Malta. I have never heard of any problems. Tell me, does you doctor ever get freebies from pharma companies?Spreading FUD was the IBM way of dealing with competition from more efficient vendors. In the long term it hasn't actually worked that well for them.

A few years ago now the UK government changed the rules so that nearly all NHS prescribing has to be of the generic. That way big pharma can't use a brand name to keep prices up on an out-of-patent drug. The only exception I have come across is where the drug company patented a new use for an existing drug, which then had to be prescribed by name when given for that use to avoid patent violation. Coupled with a fairly liberal approach to the licensing of generics and, mainly through the EU to be fair, a significant degree of recognition of other countries' manufacturing and quality control, prices have been held down.

I take several medications on a daily basis, and each time I get a new batch it is likely to be mae by a different manufacturer and come in a different box and a differently shaped and coloured tablet.

One of the plans of the Trump trade deal is to stop the UK use of generics, ad majorem megapharma gloriam.

People love to blame big pharma, and they ARE bad, but the job of creating competition and limiting market manipulation is really that of that highly esteemed and unimpeachable body, congress. Congress has abdicated its duties and should be thrown out on their collective ear. Won't happen though, because the really really rich have gerrymandered and rewritten the rules such that it is nigh impossible for the electorate to actually choose better candidates. But I'm not bitter....

It's not even an American insurance problem anymore.Big pharma understands the free market aswell and you get the best market prices is when you only provide 80% of the demand. Sure, you can make generics - but the active substance that is almost free is only produced in one place in the world, you can place an order to be fulfilled in a few months for half the amount of what you needed. The pricing makes sure that noone can find the economics to build another factory and if you did the old factory can easily ramp up to 100%... In the meantime there's whole markets with people that can't buy the drug at all or it's frequently out-of-stock or replaced with chalk-pills in nice boxes.

Call me a cynic, but I'm expecting that in the six months you guys have between electing a president and starting to campaign for the next election four years later these guys will get a visit from a friendly-yet-firm gentleman flanked by two large and silent friends professing some distress at the direction that things have taken and how it is affecting certain....business. Perhaps they could be persuaded to take a vacation, an extended one? Sure, sure, they knew they'd see things their way...

Didn't say it will, but wouldn't surprise me if was at least tried.[/quote]

Why should the pharmaceutical industry bother to engage in inefficient criminal extortion when they have gamed the FDA approval process in order to stifle competition and as a result can raise prices without facing any competitive pressure?

The problem with our health care system isn't what is illegal, it's the many legal advantages the pharmaceutical industry has obtained through their lobbying dollars.

Germany is not single payer. Their system is actually quite similar to the ACA, except that the premiums are set as a percentage of income for most people, and that the insurance companies all share formularies and a network of doctors. There may also be other differences, but those are the ones I remember off the top of my head.

That's a reasonably good description. There are three basic forms of health insurance in Germany:

- Gesetzliche Krankenversicherung: the "public" option that costs about 15% of your wages until you hit the 50000 EUR or so mark, a bit less than half of which your employer pays, so maximum of about 350/mo from you directly. This covers any non-working dependants, too! You pick which of the many Krankenkassen ("sickness funds") you wish to have as your insurer. Mandatory if you make less than about 60000 EUR per year. About 90% of Germans are covered through this system. Not available to freelancers or non-employed new arrivals from countries that do not have mandatory health insurance (i.e., Americans pre-ACA - me)

- Private Krankenversicherung: highly-regulated market, open to those making over that 60000 EUR per year. Initial premium determined by your age and health status, and which particular package you go with. Your employer covers half the premium, up to what they would have paid had you been in a Krankenkasse. Usually reimburses doctors and hospitals at higher rates than the Krankenkassen, so you tend to get appointments with specialists REALLY quickly, and have access to some doctors who have decided to only accept private patients. This is what I have because I wasn't employed when I got my residence permit, and then later started in a well-paying job. Currently, it's working out well for me (cheaper than public, aforementioned doctor access), but I'm having to save up for old age, when I'll get stuck with higher premiums. Switching to public would require getting my employer to allow me to cut my hours way back for a year so that I drop under that earnings requirement, and for me to do so before turning 55. That last bit is to prevent near-retirees from jumping into the public system right when they stop earning money and start needing more medical attention.

- Zusatzversicherung ("supplementary insurance"): this is an option for members of the public insurances to get add-on policies that do a variety of things - pay the single/double hospital room rate, pay for care by the head doctor when in the hospital, allow direct visits of specialists.

For anyone, you are always free to pay directly for medical services. For example, someone in a Krankenkasse can see a doctor who will only accept private patients - they'll just have to pay the full bill themselves.

I've always paid my bills directly - my insurer gives me a big rebate each year if I do not make any claims. I'm astounded at how inexpensive even "premium" medical services are in Germany - my two visits to a gastroenterologist and endoscopy were a whole 340 EUR. Once I hit my 1200 EUR deductible each year, this would have been covered in full by my insurer, or 75% if I didn't have an order from my primary care doctor telling me to go to the specialist.

Apparently all of this talk of universal healthcare on the campaign trail has got the insurance companies a little nervous. Good.

No it hasn't. The candidates talking about universal healthcare are also the ones defending obamacare which mandates private insurance. What they say on the campaign trail and what they do in office are two different things. The insurance companies are seeing record profits and lawmakers are seeing a lot of campaign contributions from the insurance industry. Everybody wins but the patients.

Germany is not single payer. Their system is actually quite similar to the ACA, except that the premiums are set as a percentage of income for most people, and that the insurance companies all share formularies and a network of doctors. There may also be other differences, but those are the ones I remember off the top of my head.

That's a reasonably good description. There are three basic forms of health insurance in Germany:

No offense but that sounds unnecessarily complex, unfair, largely employment based, and profit driven. That's not the answer to our woes either.

I am employed by one of the BCBS companies that are participating in this.

It was very surprising when the email blast went out at 7:30 from the CEO. I’d never heard of CivicaRx before this morning. I spent the next hour researching them, and they are the real deal.

My bet for first target: Insulin

Didn't California governor Newsom recently announce plans to create a similar organization to serve all Californians? I believe that, too, was supposed to first target insulin.

Don't hold your breath. California still has their own version of the individual mandate which was set up to protect the private insurance industry and nothing more.

I don't disagree with you however your anger towards the republicans is misdirected if you, like me, are on the individual insurance market. It was the democrats that married us to the failed employer-based private insurance model through obamacare which forever guaranteed profits and a captive market to the deadly insurance cartels. That wasn't change I can believe in when I voted for obama in 2008. The only way to get past this failed insurance racket is to get rid of the mandate and get rid of the insurance cartels and get rid of obamacare.

Unpopular opinion: health insurance companies get **more** than their fair share of blame. Why? Because they're at the consumer-facing end of a messed up system.

Don't get me wrong, US health insurance companies are super corrupt and very worthy of scorn. But frankly there are worse actors out there: hospitals that form regional monopolies, pharmaceutical companies that suppress research and lobby for anti-competitive regulation, and on and on. The problem is systemic.

I'm fine with either Medicare 4 All, like they have in the UK, or a centrist alternative like a public option with strong regulation, like they have in Germany or France. But I think the reason why M4A seems like the ONLY progressive option is because people mistakenly place the entire blame on only the insurance part instead of the whole screwed up system.

People who advocate Medicare 4 All have clearly never actually had to deal with Medicare and all its part A's, B's, C's and/or D's. Especially the latter.

I advocate Medicare 4 All, I'm on Medicare Part A, B, C and D and it's the best coverage I've ever had.

That doesn't say much about your previous coverage.

(Also, if you really are on all four parts, you're probably (not necessarily) paying for something you don't need. And Part C is by private companies, not the feds, although the companies have to be Federally approved.)

No, my previous plans were crap. They were also what private employers were giving me for coverage because they're cheap sons of bitches and don't want to pay for it.

The US free market economy is a joke when the overseeing body -- US Congress -- welcomes bribes. Big Pharma is allowed to bribe members with generous "campaign contributions" to make sure near-monopolies are protected from excess competition. Both major political parties seem to favor bribes over citizens. The US also has NRA bribes which lead to the slaughter of 10,000s of our youth annually.Plus, H-1B bribes result in 71% of Silicon Valley tech workers being foreign born (SJMN).Isn't free enterprise just wonderful? Curmudgeon.

Apparently all of this talk of universal healthcare on the campaign trail has got the insurance companies a little nervous. Good.

Meh. Entirely more likely that the folks gouging on generics pricing simply created enough of a market for this sort solution by pricing enough often-prescribed medications excessively high enough for this to make a net savings....Not to mention that Blue Cross and Blue Shield can probably afford a not-insignificant part of that USD 55M out of their marketing budget, so expect to be hearing about this when the next open enrolment starts, I suspect. In the end, this is just an almost-inevitable consequence of a functioning free market, in one of the relatively few links in the pharmaceutical supply chain where that makes sense.Getting too greedy gives cheaper competition the air to breathe in order to survive long enough to carve out market share (and earn back initial expenses!). IMO arguing this is a result of any universal health care related bloviating whatsoever is wishful thinking at best.

Except that free-market has not worked. The pharmaceutical industry is adept at working around it.

The companies that would or could break stranglehold get bought off (in a number of different ways that are difficult to prosecute as racketeering) because there is just too much money involved and available to persuade them to keep to the status quo.

Note that this new company is a NON-PROFIT. That's probably the only thing that can work, as it has zero incentive to allow itself to be bought off.

In a move that surprises no one, the companies that foot the bill for most of those $1500+ pills are looking to invest in companies that make generic equivalents that cost $15.

That is actually one thing I don't quite understand. Aren't the insurance company's premiums, and thus, profits linked, by law, to their medical expenses? It was one of the flaws, or misplaced incentives, in the ACA. I think it was that the the premium is capped so that 80% of it must go towards medical expenses.

So the insurance company would make $3.50 off the $15 generic pill, but $350 off your sample $1500 pill.

Why would the insurance company want to *lower* the cost of drugs?

1. Believe it or not, profit isn’t always the number one consideration.

2. A healthier population lowers costs for everyone, making everyone happy.

Apparently all of this talk of universal healthcare on the campaign trail has got the insurance companies a little nervous. Good.

Meh. Entirely more likely that the folks gouging on generics pricing simply created enough of a market for this sort solution by pricing enough often-prescribed medications excessively high enough for this to make a net savings....Not to mention that Blue Cross and Blue Shield can probably afford a not-insignificant part of that USD 55M out of their marketing budget, so expect to be hearing about this when the next open enrolment starts, I suspect. In the end, this is just an almost-inevitable consequence of a functioning free market, in one of the relatively few links in the pharmaceutical supply chain where that makes sense.Getting too greedy gives cheaper competition the air to breathe in order to survive long enough to carve out market share (and earn back initial expenses!). IMO arguing this is a result of any universal health care related bloviating whatsoever is wishful thinking at best.

Apparently all of this talk of universal healthcare on the campaign trail has got the insurance companies a little nervous. Good.

Meh. Entirely more likely that the folks gouging on generics pricing simply created enough of a market for this sort solution by pricing enough often-prescribed medications excessively high enough for this to make a net savings....Not to mention that Blue Cross and Blue Shield can probably afford a not-insignificant part of that USD 55M out of their marketing budget, so expect to be hearing about this when the next open enrolment starts, I suspect. In the end, this is just an almost-inevitable consequence of a functioning free market, in one of the relatively few links in the pharmaceutical supply chain where that makes sense.Getting too greedy gives cheaper competition the air to breathe in order to survive long enough to carve out market share (and earn back initial expenses!). IMO arguing this is a result of any universal health care related bloviating whatsoever is wishful thinking at best.

Non-profits are, manifestly, NOT part of the free-market.

Assuming a non-profit can handle the barrier to entry, the competition one can provide is CRITICAL to a free market, particularly when the entrenched interests hold asymmetrical information--aka being incentivized not to compete on price.

I've been dealing with clinical depression most of my life. My doctor and I finally found a new drug that worked well for me and I was on the right track for recovery. Then randomly when I went in for a refill the price for the drug changed from free, to 900 dollars, because my insurance reclassified it. Now I am in the process of weaning off it because I can't afford it.

Burn them down.

You understand it was most likely your employer that told them to do that, no?

Employers deserve some blame, but are probably the least evil in this entire charade. You are also vastly overestimating their power -- even a giant corporation can only shop around to so many places. They might get a favorable rate and not pass that on -- but they're not going to be able to bludgeon the entire system and pocket the difference.

This is notable and I really hope it works out. I hate having to pay so much for the medicines I take and, thankfully, am in a position financially where I can afford it. But at some point that can change and I am sure there are many people who have had this happen. We have to have a frank discussion about what is the reason for the high cost of prescription drugs in this country.

I am sure many will point to the pharmaceutical companies, but the regulatory process needs to be taken into account. In my opinion, that is the primary culprit. More rules and regulations force drug companies to ratchet up prices and make it harder for other competitors to innovate and manufacture cheaper, better alternatives. This effort, while notable, may be successful at first, but when people start drifting toward these generic drugs that are cheaper, they will be in short supply due to demand. At some point, they will have to raise their prices too. It will get worse if they were provided for "free" (which there is no such thing).

Ultimately, what I am saying is that this doesn't get to the root cause of the problem and if one looks deep down, in my opinion, government is usually the reason. Thank you.

I've always paid my bills directly - my insurer gives me a big rebate each year if I do not make any claims. I'm astounded at how inexpensive even "premium" medical services are in Germany - my two visits to a gastroenterologist and endoscopy were a whole 340 EUR. Once I hit my 1200 EUR deductible each year, this would have been covered in full by my insurer, or 75% if I didn't have an order from my primary care doctor telling me to go to the specialist.

Illuminating, but depressing. 20% of the cost of my colonoscopy was $700+. Seems like your insurance is just as weird, but the treatments as you say, are far, far cheaper.

The FDA has pulled a few generics over the years, often MANY years after people originally reported on discrepancies. It took FIVE YEARS for the FDA to reverse their original “it’s all in your head” bullshit and get around to pulling a dangerous generic for Wellbutrin.

Per wiki:

“ On 11 October 2007, two providers of consumer information on nutritional products and supplements, ConsumerLab.com and The People's Pharmacy, released the results of comparative tests of different brands of bupropion.[116] The People's Pharmacy received multiple reports of increased side effects and decreased efficacy of generic bupropion, which prompted it to ask ConsumerLab.com to test the products in question. The tests showed that "one of a few generic versions of Wellbutrin XL 300 mg, sold as Budeprion XL 300 mg, didn't perform the same as the brand-name pill in the lab."[117] The FDA investigated these complaints and concluded that Budeprion XL is equivalent to Wellbutrin XL in regard to bioavailability of bupropion and its main active metabolite hydroxybupropion. The FDA also said that coincidental natural mood variation is the most likely explanation for the apparent worsening of depression after the switch from Wellbutrin XL to Budeprion XL.[118] On 3 October 2012, however, the FDA reversed this opinion, announcing that "Budeprion XL 300 mg fails to demonstrate therapeutic equivalence to Wellbutrin XL 300 mg."[119]”

Brand peaks at 2-3 hours, generic peaks 5-6 hours, with rapidly different onsets the psychoactive effect may be totally different.

The take home message is the answer to “are generics the same as brand?” Is NOT “yes”. It’s “usually, but especially time released medications may not be equivalent”.

With all the money we spend on drugs you would think we could require them to be made in the USA where inspections can be carried out, and we could require that the drug delivery mechanisms and binders are required to be 100% open sourced after 14 years of sales (or whatever) so that generics don’t have to invent another time release mechanism and instead could use the same exact method as brand (which is sometimes, but not always the case currently).

I apologize for the long wall of text, but I feel like this is an important issue that is rarely discussed. We need better and more stringent standards for generics. If the funds for that have to be paid for by a very small tax on all medicine sold so be it. (Typed on Mobile, please excuse typos if applicable).

In a move that surprises no one, the companies that foot the bill for most of those $1500+ pills are looking to invest in companies that make generic equivalents that cost $15.

Not really. Health insurers are more than complicit in rising healthcare costs because it makes consumers more reliant on having insurance even for minor needs and it lets them excuse obscene insurance rates.

And it's exceptionally rare that your health insurer pays sticker price for medications. At the very least they get backend rebates from the pharmaceutical companies and middlemen distributors so your copay / deductible can stay high based on the effectively fraudulent receipt you see as a consumer.

$55 Million will not go very far when trying to set up a production lines and complete ANDAs for even simple off patent items such as concentrated electrolytes for injection (e.g. KCl, NAPO4, etc.) So I have to assume that is really what this game is about - it's going to help organize and fund a syndicate demanding rebates.

I've been dealing with clinical depression most of my life. My doctor and I finally found a new drug that worked well for me and I was on the right track for recovery. Then randomly when I went in for a refill the price for the drug changed from free, to 900 dollars, because my insurance reclassified it. Now I am in the process of weaning off it because I can't afford it.

Burn them down.

You understand it was most likely your employer that told them to do that, no?

Employers deserve some blame, but are probably the least evil in this entire charade. You are also vastly overestimating their power -- even a giant corporation can only shop around to so many places. They might get a favorable rate and not pass that on -- but they're not going to be able to bludgeon the entire system and pocket the difference.

Employer insurance plans are customized for the employer. Look at your own plan and all the riders. The purchasers of the insurance - your employer - decides what they want to buy. If the employer wants to pay for $900 drugs they certainly can.

Large employers don’t even buy health insurance - they are self-insured. They enter into an Affiliated Services Contract with a health insurer. The short version of which says “you get our negotiated pricing, pay a flat fee per claim to process them”. Now there’s additional stuff around that like Loss Stops and regulations. But in this scenario the employer makes ALL coverage decisions.

Fun fact: Have a large medical expense? Talk to your benefits people. Companies will work with the insurance provider. I advised my neighbor to do this when she needed a prosthetic, saved about a grand.

In a move that surprises no one, the companies that foot the bill for most of those $1500+ pills are looking to invest in companies that make generic equivalents that cost $15.

Not really. Health insurers are more than complicit in rising healthcare costs because it makes consumers more reliant on having insurance even for minor needs and it lets them excuse obscene insurance rates.

And it's exceptionally rare that your health insurer pays sticker price for medications. At the very least they get backend rebates from the pharmaceutical companies and middlemen distributors so your copay / deductible can stay high based on the effectively fraudulent receipt you see as a consumer.

$55 Million will not go very far when trying to set up a production lines and complete ANDAs for even simple off patent items such as concentrated electrolytes for injection (e.g. KCl, NAPO4, etc.) So I have to assume that is really what this game is about - it's going to help organize and fund a syndicate demanding rebates.

All those companies can sell their new drugs for a profit in the United States, separate from whether they can make a profit in their home countries. If we destroy the ability of pharma from profiting on new drugs (which is not at all what the article is about), then all those companies lose their biggest potential profit center. Therefore, they're less likely to invest as much into development.

Apparently all of this talk of universal healthcare on the campaign trail has got the insurance companies a little nervous. Good.

No it hasn't. The candidates talking about universal healthcare are also the ones defending obamacare which mandates private insurance. What they say on the campaign trail and what they do in office are two different things. The insurance companies are seeing record profits and lawmakers are seeing a lot of campaign contributions from the insurance industry. Everybody wins but the patients.

The ACA is kind of a camel (horse designed by a committee for those who don't know the reference). It's probably not what Obama and the part of the Democratic party who really wanted health care desired, it's what they thought they could get. That's why no public option or allowing for price negotiations on drugs.

This sort of thing sounds, superficially, appealing. An org answerable to hospitals and payers is a second source of out-of-patent drugs, to undercut the monopoly pricing imposed by the existing drug makers. (Many vital generic drugs are only made by one company, and they've discovered they can extract monopoly rents from payers).

There's another superficially appealing scheme that's been around for decades: Group Purchasing Organizations (GPOs). These outfits, some comercial and some not-for-profit, aggregate hospital orders for supplies like syringes, sheets, surgical expendables, and so forth. The (naive) justifications: big orders drive down prices, and hospitals' ordering procedures are simpler.

But, like any field of human activity where a lot of money floats around, corruption follows. Many GPOs now extract legal kickbacks from manufacturers like Baxter, and pass those costs along to hospitals, thence to payers, thence to people who pay health insurance premiums: our employers and ourselves. https://www.modernhealthcare.com/articl ... care-costs

I sure hope this Civica outfit, and the California factory, can avoid falling into the same kickback system as the GPOs.

All those companies can sell their new drugs for a profit in the United States, separate from whether they can make a profit in their home countries. If we destroy the ability of pharma from profiting on new drugs (which is not at all what the article is about), then all those companies lose their biggest potential profit center. Therefore, they're less likely to invest as much into development.

Whaaaat, seriously you are putting forth a proposition that foreign drug companies bring new products to market to make no money anywhere except in the US?